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Group Five to plead or face default judgment

Collusion whistle blower denied prior access to investigation record.

The Competition Tribunal has given Group Five 20 business days to plead to charges that it colluded with Wilson Bayly Holmes-Ovcon (WBHO) and Murray & Roberts in a 2006 contract for the South African National Roads Agency. (Sanral).

Group Five was the main whistle blower in the Competition Commission’s high profile investigation into bid-rigging in the construction industry, that resulted in industry players paying R1.46 billion in administrative penalties following a fast-track settlement process in June 2013.

Group Five received corporate leniency as a result of its cooperation and escaped penalties, but then found itself on the wrong side of the commission, as other players implicated it in transactions that it did not disclose to the commission.

The commission decided to pursue four matters against Group Five. The company was not prepared to settle these issues with the commission, as it maintained its innocence and argued a lack of evidence against it.

The commission has subsequently dropped two of the matters.

One of the remaining matters relate to the award of a roads contract, referred to as the ‘Senekal project’ by Sanral. WBHO spilled the beans on this issue and received leniency. Murray & Roberts admitted guilt and entered into a settlement agreement with the commission.

Group Five earlier applied to be given access to the commission’s record of investigation before pleading on the matter. In a statement issued on Monday the Competition Tribunal said Group Five “relied on the terms of a public access provision in Competition rule 15, which regulates the right of access to the commission’s record.

The tribunal said in a statement on Monday it “agreed with the commission’s argument that these documents should only be provided after pleading.”

The tribunal at the same time rejected an application by the Competition Commission for a default judgment against Group Five on the grounds of its failure to file an answer to the charges before the deadline lapsed.

The tribunal instead ordered Group Five to file its answer in 20 working days, failing which the commission “may approach the registrar to set down its application for a default judgment that is pending.” No costs were awarded.

Group Five said in reaction it has “noted the decision and is considering its position.”

The tribunal statement was issued shortly before the market closed and had no effect on the share price.

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